This short work is a conference-style critical commentary, not a freestanding treatise: Machlup responds to Abram Bergson on socialist productive efficiency and Jan Tinbergen on egalitarian welfare economics. Its scope is deliberately asymmetrical. Bergson’s empirical comparison of Soviet and Western performance is accepted with little discussion; Tinbergen’s argument for income equalization becomes the real target.
I conceive my task to be chiefly that of a critical commentator.
Machlup frames the debate around the two classic socialist claims: superior efficiency and superior distributive justice. His central thesis is that Tinbergen’s egalitarian project rests on unproved ethical postulates, implausible interpersonal welfare measurement, and a neglect of incentive effects. The issue is not merely whether equality is attractive, but whether it can be derived as a social mandate from welfare economics.
Ethical choices can be made only on the basis of postulates, and postulates cannot be judged to be true or false.
This is the essay’s key conceptual move. Machlup separates economic analysis from ethical assertion: a social welfare function cannot by itself validate redistribution unless one first accepts controversial moral assumptions. He treats Tinbergen’s appeal to solidarity over envy as either empirically false or morally hortatory, and he argues that egalitarian sentiment often involves “vicarious or reflected envy” rather than neutral social calculation.
Tinbergen is an idealist in two respects: not only does he champion the ideal of equality of income distribution, but he also believes that the ideal of equal sharing is actually a top-priority objective of our society.
Machlup then radicalizes Tinbergen’s logic by extending it internationally. If equalization is justified within nations, it should be even more urgent between rich and poor nations, where inequality is greater. But this exposes, for Machlup, the political unreality of the ideal: Americans might endorse equality abstractly, but not a redistribution reducing their income toward the world average.
In a worldwide referendum I would expect a majority to vote for radical redistribution, so that the poor can share the wealth with the rich—with the result that all would be equally poor.
The deeper objection concerns utility measurement. Tinbergen’s scheme requires comparing, adding, and subtracting the welfare feelings of different persons. Machlup calls this a “welfare thermometer” fantasy and denies that even successful measurement would generate an ethical command to redistribute.
An argument like this presupposes the possibility of interpersonal comparisons and measurement of utility or welfare.
The essay’s later sections turn from moral philosophy to institutional feasibility. Tinbergen proposes taxing potential rather than actual income to preserve incentives, but Machlup treats this as impractical and gameable: if test scores determine tax burdens, people will learn to underperform. More broadly, egalitarian taxation cannot escape behavioral response.
Tinbergen no doubt realizes that the confiscation of excess incomes (the portion above the average) would affect people’s efforts and exertions and that national and world incomes would fall as a result.
Machlup closes by returning to socialist experience itself. Even communist authorities, he argues, recognized that wage differentials were necessary to retain labor discipline and productive effort. Equality, pursued without regard to incentives, undermines the very productive capacity from which redistribution must draw.
The leaders of the Communist parties in the socialist countries recognize that the incentive effects of differences in incomes are indispensable for productive efficiency in the socialist economy.
The relevance of the piece lies in its compact statement of a liberal critique of egalitarian welfare economics: equality cannot be smuggled in as a technical conclusion, and redistribution cannot be evaluated apart from knowledge, incentives, consent, and the limits of interpersonal utility comparison. Its final irony applies economic reasoning to Machlup’s own commentary: equal treatment of Bergson and Tinbergen is sacrificed to the more productive use of scarce critical time.
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